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Should I Buy C.H. Robinson Worldwide, Inc. (CHRW)?

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·6 min read
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In this article you are going to find out whether hedge funds think C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) a buy here? Hedge funds were in an optimistic mood. The number of bullish hedge fund bets advanced by 8 in recent months. C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) was in 31 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 32. Our calculations also showed that CHRW isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Clint Carlson of Carlson Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let's go over the recent hedge fund action encompassing C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW).

Do Hedge Funds Think CHRW Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 35% from the first quarter of 2020. On the other hand, there were a total of 28 hedge funds with a bullish position in CHRW a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), which was worth $119.9 million at the end of the second quarter. On the second spot was Balyasny Asset Management which amassed $33.8 million worth of shares. D E Shaw, Citadel Investment Group, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sandbar Asset Management allocated the biggest weight to C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), around 1.05% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, earmarking 0.37 percent of its 13F equity portfolio to CHRW.

As aggregate interest increased, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most valuable position in C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). Balyasny Asset Management had $33.8 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also made a $17 million investment in the stock during the quarter. The other funds with brand new CHRW positions are Steve Cohen's Point72 Asset Management, Clint Carlson's Carlson Capital, and Alexander Mitchell's Scopus Asset Management.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) but similarly valued. We will take a look at Annaly Capital Management, Inc. (NYSE:NLY), Texas Pacific Land Corporation (NYSE:TPL), Cemex SAB de CV (NYSE:CX), Cna Financial Corporation (NYSE:CNA), Sibanye Stillwater Limited (NYSE:SBSW), Invesco Ltd. (NYSE:IVZ), and iQIYI, Inc. (NASDAQ:IQ). This group of stocks' market caps are closest to CHRW's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NLY,19,98211,4 TPL,21,2592325,4 CX,23,601778,-1 CNA,13,65189,-6 SBSW,15,257887,-1 IVZ,40,1343997,8 IQ,27,1096859,-13 Average,22.6,865178,-0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $865 million. That figure was $299 million in CHRW's case. Invesco Ltd. (NYSE:IVZ) is the most popular stock in this table. On the other hand Cna Financial Corporation (NYSE:CNA) is the least popular one with only 13 bullish hedge fund positions. C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CHRW is 72.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on CHRW as the stock returned 1.6% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.